by Robert Barden

Created on: February 25, 2009

While I applaud the Obama administration for their proposal to limit the executive pay of corporate welfare recipients, I take exception to the exemptions. There are so many exemptions that a close examination of these new rules would have one believing that they were written by the corporate lobbyists themselves. The loopholes in these rules are big enough to fit a million dollar executive washroom.

Top of the list of loopholes is the statement that the companies that have previously received bailout funds are exempt from these executive pay caps. Why? Last I knew these companies haven't repaid this debt and are still on the hook to the American taxpayers. These companies include, among others, JP Morgan Chase, Bank of America, Citigroup and Wells Fargo. How many taxpayers are struggling the affects of recent unexplained changes to their account terms with these companies changes resulting in higher minimum payments, lower credit limits, and inflated monthly finance charges? How many people have seen their accounts go into default because they can no longer afford to make the minimum payments, which in many cases has more than doubled in recent months?

As a small business owner, I've had the personal experience of closing my credit accounts with three of these four companies because of unwarranted changes to the account terms that I've found to be unacceptable. Why shouldn't we turn the tables by changing the terms of their loan agreements with the American taxpayers? If the companies don't agree to the new terms, they can always opt out and pay the loans in full.

According to the terms of these new rules, companies could get around the pay cap by paying the executives in restricted stock that cannot be sold until the company has repaid its government debt. I don't understand how this will help to end a system of executives being rewarded for failure, which is the stated intent of these new rules. Forcing people to wait a few years to cash their multi-million dollar bonus checks may be considered by some to be less rewarding, but this is still a reward in my book.

The rules also stipulate that companies can thwart the pay cap by providing a full public disclosure and holding a non-binding shareholder vote. A non-binding shareholder vote reminds me of my first military haircut. Just before shaving my head to stubble, the barber smiles and asks, "So, how do you want it?" I was reasonably sure that my input would have little influence over the final outcome.

But I don't want to feel this way about my government. President Obama was right when we said the American people had certain expectations when we elected him. And those expectations extend to the collective action of our government as a whole. I would expect that our government could draft a set of rules that puts the interest of the American people first. Let's really put an end to this system of rewarding failure, without exceptions. After all, it's the American taxpayers that are footing the bill for this, and we have the right to expect representation from our government.

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